Netpliance Pays Up For False Advertising And More

The Dev writes: "According to this story Netpliance 'greed to pay a civil penalty of $100,000 and reimburse some customers who had been charged Internet access fees before they used the service.' This is probably in response to their tactics after it was discovered that the I-Opener made a cool portable Linux workstation." It didn't take after the realization of its possibilities as a slim linux box for Netpliance to start charging people whether or not they signed up for their service.

Comments

Re:shady dealings

[cvd6262]

Someone on a hacking-the-iopener BBS tried to blame the hackers for NPLI not turning a profit. One of the users turned around and went through the company's numbers. They found something interesting.

iOpeners cost ~$400 (most of that being the LCD screen). They sold them for either $99 or $199. To keep it simple, let's say that every unit sold went for $200. The price of service was $21.95/month, most of which went to the cost of said service.

So, NPLI was making about ~$10/month (I know I'm being generous) on every unit on which they had lost at least $200. This means that they *could not turn a profit for at least two years*!

I really think that NPLI was doomed with or without those of use who like computers in our kitchens.

How are refunds implemented?

[Tackhead]

From the FTC's news release

Blockquoth the FTC:

"First, the company billed some consumers for Internet service based upon the date they received their i-openers. These consumers, however, did not owe the company money because, when they ordered their i-openers, the company had promised them that they would not be billed until they actually used the service."

"Second, the company back billed these same consumers for months of Internet service by charging their credit or debit cards without their consent."

"As part of the settlement, the company agreed to refund those consumers for the amounts illegally charged to their accounts."

It appears from my reading that there are two classes of people entitled to refunds:

1) If they said you wouldn't be billed until it phoned home, and it didn't phone home, and you got billed.

2) If you got back-billed for multiple months (IIRC there was a thread where people got hit with multiple months of billing all at once, but I can't verify that.)

Does anyone know how such refunds are to be administered? (i.e. do you have to phone NPLI and ask for them, or should you expect that within a certain timeframe, your credit card will see a pleasant surprise?)

Without getting into the ethics of getting money from a nearly-dead dot-com, if there's an FTC ruling, and the company has agreed to settle on this basis - it seems that people in either category have a right to this money, and they ought to be able to get it if they choose to exercise that right.

Anyone have details on how this sort of thing "usually" works out?

Netpliance/Earthlink bad news for customers

[ahrenritter]

I especially like this part:

"The company also agreed to change its practices so further violations would not take place."

Seeing as how they have stopped offering the i-opener service, and sold the existing customers off to Earthlink, that shouldn't be too difficult for them.

I still get very mad at them whenever I think about it. I purchased two i-openers, one for each of my parents. My mother went through 4 of them before we gave up (the modem kept going bad). My dad faired slightly better until the change-over to Earthlink.

First, one of the big things Netpliance talked about when notifying their customers they had been sold out was that their monthly service would drop from $21.95 to $19.95! Great. What happens? Earthlink just hikes their rates.

My irritation with Earthlink didn't stop there. When my father called them because he couldn't connect to their service anymore, the support person told him that there wasn't anything they could do.

"No one knows anything about those things, and anyway, they aren't high-powered enough to handle our service. It is just going to get worse. I would suggest you get a real computer instead."

Fantastic customer service there. Not to mention the fact that I waited for one hour and fifteen minutes during the middle of the day to speak with an Earthlink representative just to cancel my two accounts with them!

Re:shady dealings

[Tackhead]

> this should make an interesting trial case for all the discount PCs that require 1-2 year contracts with AOL or some other ISP (and end up costing as-much-as twice what the PC alone would have gone for). could these tactics get the same treatment as Netpliance's?

I don't believe so.

The thing about NPLI was that they didn't, initially, have a contract. You bought the device for $99.00 (plus $40 shipping if you got it direct from Taiwan), and you owned it, free and clear.

It was useless without either (a) h4x0ring it, or (b) using their subscription.

They expected people not to hack it, but to use the subscription, but (as the contract was originally written), you could stop the subscription (rendering the device useless) at any time, and billing wouldn't start until it had phoned home.

(The device, as originally configured, was designed to phone home and activate itself when first plugged in.)

What is at issue is that Netpliance personnel, when asked (I can confirm this, because this was my experience when I ordered mine) about when the subscription charges started, said - point-blank - "No, you won't be charged for the service until it phones home".

When people who bought the devices and never plugged them into a phone line got billed, all hell broke loose, and this is what Netpliance is being LARTed for.

Yes, the hackers who never intended to let them phone home (and who never did let the unit phone home) were exploiting the loss-leader nature of the deal. Although this was, perhaps, acting in bad faith, it was still within the law.

Much later - after Netpliance had adjusted their terms of service to include a contract - purchasers under those terms were legitimately billed.

So this doesn't have much to do with the "Cheap computer with 2 years of MSN/Earthlink" deals, where the ball-and-chain is disclosed up front.

What Netpliance did was attempt to invoke the ball-and-chain without having the "chain" (contract) in place.

I got caught up in this as well.

[Edward Kmett]

I actually purchased one of these for its original purpose (for my grandmother) to get her on the internet for her birthday. After I made the purchase she wound up getting a (used) real computer from a friend. Therefore I didn't bother to remove the I-Opener from the box. Netpliance after all wouldn't take the machine back. Mine was purchased right before they made the declaration that they would be automatically signing everyone up. A year later, I was cleaning up my credit card bills and found out they'd been billing me all along.

It took about 6 phone calls and various threats to get my money back - which was promised to me on 3 different calls, but somehow they kept failing to follow through.

Maybe I'm missing something?

[Restil]

Ok... I agree its wrong to charge someone for a service they're not using. However, thats about the only point in that article that makes any sense.

The point about them not stating that they would require a monthly payment is more or less meaningless. At some point, somebody had to sign something to authorize that. Someone had to fork over a credit card number. I can see this engagement happening at the checkout stand and a confused potential customer finding out at that time, but that customer has the option to tell the clerk something uncivilized and leave without singing into the contract.

Secondly, what exactly is "full internet functionality?" From a technical point of view, I have full "internet" functionality if I'm able to open a tcp socket to another computer on the internet. We are now functional. Granted, the iopener's basic design did not allow EVERY conceivable internet service to run. How exactly is this a problem? You can't play any of the pc or mac games on it. does this mean its lacking functionality? Its simply not an option it supports, but there's nothing that precludes such an option from being available, should someone port such a game to that platform and find a way to flash it on there. Yes.. not all iopeners have hard drives.... yet. :)

I wonder how many of these issues aren't just thrown in as padding to make the lawsuit seem more legitimate? Does it improve their chances of winning the suit on SOME ground even if its not the issue they were actually trying to go after? I wonder.

And what of the consumers who bought into it anyways? Its really sad that the average human being looks at a pretty box on a shelf in a store, and just plops down some money and walks out with it without ever thinking about what they've got. Then when its not everything they hoped for (and probably nothing ever is), they get upset about it. I wonder what would happen if they bought a discount TV set and discovered, after getting it home and unpacked, that it DIDN'T come with a remote control. I mean.. every OTHER TV set has a remote control, how can we reasonably expect that this model wouldn't?

So what was advertised anyways? did they say it had multimedia support? did it? Did it play ONE file format of some kind? Then it has it. It doesnt' play real? It doesn't play asf? Oh.. it plays mpeg.. its got multimedia support people. The fact that 99.9% of the content on the internet doesnt' support it, DOESN'T MATTER. Educate yourself if you want to know what you're getting. Otherwise, you'll always be disappointed. (DISCLIAMER.. I dont' know WHAT the iopener supports, and I dont' intend to find out, so if my hypethetical situations here are wrong, please don't sue me :)

-Restil

Punishment fit the crime

[GGardner]

For a company that spent in excess of one milion dollars for a single Super Bowl advertisement, is a $100k penalty really suitable? Or is the penalty small because instant karma has already gotten them?

Everybody's doing it

[joq]

Anyone ever take note when they see PC's advertised for say 899.99 there is almost always an asterisk next to the price which includes some kind of connection to either MSN, or Dellnet, or something similar. It's been going on for some time, and you really can't place blame on the advertisers for placing type so small you need a microscope to read it.

Politicians haven't regulated advertising, and although there are some rules against bait and switch tactics, as well as others, you have to stop and think about whether the consumer actually has a clue when purchasing something.

Same thing with so called mail in rebates. I used to work in at Grey Direct whose parent co. Grey Worldwide is one of the top ten advertisers in the world, so anyways when there, I remember asking about those mail in rebates, and was told: "Those are placed in hopes people don't bother mailing them in" more or less. I was then told that almost 85% or more of the times no one bothers to mail them in, but they're placed there to attract attention.

Either way you have to place some blame on the consumer as well for not reading the fine lines, then bitching about getting shafted in the end.

What a slippery world...

[sacherjj]

...where lawyers can twist things so.

Netpliance agreed to pay a civil penalty of $100,000 and reimburse some customers who had been charged Internet access fees before they used the service.

Yet...

Netpliance did not admit guilt

Here is all the money we took, and an amount to show that we won't do it again, but we really did do anything? Gotta love it.

NOt internet compatible???

[www.sorehands.com]

Who says you need to play movies or music to be considered on the internet?

The article says:

The company also falsely claimed the i-opener could provide complete Internet functionality, when in fact it could not process multimedia features like digital music and video or run software available over the Internet, the FTC said.

SO, what is the definition for complete internet compatibility? Windows ME and Internet Exploder?

Nobody admits guilt

[sulli]

Typical for a settlement. Admit guilt and you encourage more lawsuits.

This happened to me

[AirLace]

I now happily boot Linux off the i-opener EEPROM and get it to mount a root filesystem over the network. However, Netpliance started charging me their monthly fee despite that I'd signed up before they had introduced the mandatory fee. I called them and they were very good about refunding the $60 or so they had already charged me. However, they continued to charge the credit card after that rather scrupulously, and I couldn't even get through to them that time. In the end they got another $60 which I never claimed back, after which they stopped charging me. Even though this was about 60% of the cost of the i-opener itself I decided to let it go as I realised they needed all the cash they could get and I was already getting more value out of the device than the amount they had charged me in whole. However, now that the opportunity has arisen I might do something about it and get my money back. Does anyone have any contact numbers?